Analysts' corner

DB CORP
Reco price: Rs 239
Target price: Rs 282
DB Corp (DBCL) posted strong top-line growth of 18.4 per cent Year on Year (YoY) driven by ad and circulation revenue. On a like-to-like basis, barring the recently launched Dhanbad and Marathi editions, the consolidated advertisement revenue grew 17-18 per cent YoY. Among the other segments, radio recorded strong growth of 18 per cent YoY in advertising revenue to Rs 12 crore. Gross margin contracted a significant 561 basis points (bps) YoY on account of higher circulation volume, as the company launched three new editions and an increase in domestic newsprint prices. Other operational costs like staff cost , SG&A expense and operating expenses also registered an increase, resulting in operating margin contraction of 966 bps YoY. DBCL reported a net profit de-growth of 15 per cent YoY, impacted by lower margins, other incomes went down by 15.7 per cent YoY, higher depreciation cost and high tax rate. Over the FY11-13, analysts peg a 15.1 per cent and 2.4 per cent CAGR in ad and circulation revenue respectively.

—Reliance Securities

GLAXOSMITHKLINE PHARMACEUTICALS
Reco price: Rs 2,316
Target price: Rs 2,300
GlaxoSmithKline Pharmaceuticals (GLXO) has launched two oncology products, Votrient and Revolade, in India. The company has been aggressively launching products in the recent past with over seven branded generic launches and a few launches in the dermatology space in CY10. For CY11, in addition to two products launch, GLXO plans to launch one vaccine (Synflorix-a pneumococcal vaccine for kids), in Sept ‘11. It also intends to launch cardiovascular and dermatology products, that would drive the future growth. However, the current CY11-12 revenue growth estimates of 19/16 per cent factor in these launches. Analysts thus find the current valuations expensive.

—Religare Institutional Research

NIIT
Reco price: Rs 56
Target price: Rs 69
For the Q1 FY12, NIIT reported the in-line results. Revenue growth of 15.5 per cent YoY amounting to Rs 321 crore, was driven by all businesses. However, the operational performance was dented due to the SLS business, which posted a 472 bps YoY dip in Ebitda margin. The hiring environment in the Indian IT sector is strengthening, as indicated by IT players such as Infosys and TCS, both aim to hire 105,000 people collectively in FY12. Thus, analysts expect ILS to record strong growth of 16 per cent YoY in FY12, and the strengthening of the hiring environment might result higher demand for vocational courses. With the developed economies returning to growth trajectory, analysts expect discretionary spending related to training, outsourcing, learning products and training services. It expects a seven per cent YoY growth in the CLS business.

—Angel Broking

GATI
Reco price: Rs 76
Target price: Rs 85
GATI, a pioneer in cargo delivery, distribution and supply chain management has a presence of over two decades in India. It is also the first company in the country to initiate road shipment movement on a direct door delivery basis to Dhaka. The company has a strong international market presence and distribution network in Asia Pacific and SAARC countries. Moreover, it is aiming for the opportunities in Europe and Middle East. GATI offers multi-modal connectivity solutions for cargo through the use of IT solutions systems like ERP and CRM for efficient operations. Customised cargo services have also been introduced to cater Indian businesses in Thailand. GATI Ltd. initiated a “re-branding” exercise that would aid in placing the company in the bigger market slot.

-Karvy Stock Broking